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Matt Christensen's Blog

By Matt Christensen | Mortgage Broker
or Lender in Prior Lake, MN
  • What is Quantitive Easing (QE 4) and how does it effect mortgage rates

    Posted Under: Home Buying in Minnesota, Financing in Minnesota, Agent2Agent in Minnesota  |  February 18, 2013 11:55 AM  |  108 views  |  No comments
    Quantitative 4 or Quantitative Easing 4 is a way the Federal Reserve bank (FED) is stimulating the economy, and specifically the mortgage market.

    The FED is buying Treasury notes and a finical instrument known as mortgage backed securities (MBS) 

    A MBS is essentially a large bundle of mortgages that is then sold as an investment. 

    The law of supply and demand now come in to play, With the FED buying $85,000,000,000 a month it sharply increases demand so mortgage rates are lowered to meet the demands of the market.

    In the most recent minutes of the FED meeting there was discussion about ending QE4.  When this occurs, mortgage rates will go up.  This probably will not happen right away, but just the discussion of it has caused a slight increase in mortgage rates.

  • Important changes to FHA loans

    Posted Under: Home Buying in Minnesota, Financing in Minnesota, Property Q&A in Minnesota  |  February 10, 2013 9:45 AM  |  119 views  |  No comments

    The Federal Housing Administration (FHA)  has just released changes that will go into effect for all new FHA loans Beginning April 1st 2013

    They are increasing the Annual Mortgage Insurance slightly in rate, and are collecting it longer.

    Currently they collect the Mortgage insurance till the loan balance is 78% of the value based on purchase price or 5 years which ever is greater on a 30 year mortgage.

    The new rules will have a minimum of 11 for loans that are originated at 90% premium (Loan to value)  and for the life of the loan for those originated with preferably above 90%  There is a break down below.

    My take on this is in the short term it will not be a big issue for buyers, the monthly change will have a small effect on the amount you can afford to borrow.  The long term effects however really protect the FHA.  As you may know FHA loans are assumable if the new person can credit qualify.  Rates will not stay this low for long, when they do rise having a low interest loan that a buyer can assume will make your home more attractive to buyers, and can even get a premium price!

    What you need to know, if you are buying or refinancing, What you will need to lock in the current guidelines is called a "FHA Case number"   This is requested by the mortgage professional you are working with and issued by the FHA.  It is tied to an address, so if you are buying plan to make an offer preferably before the last week in March.  If you are refinancing you have a little more time.

    Feel free to ask any questions,

    -Matt Christensen
     NMLS #373371

    Mortgage Letter 2013-04,

    Revision to the
    Period for
    Annual MIP
    The table below shows the previous and the new duration of annual MIP by
    amortization term and LTV ratio at origination.
    Term  LTV (%)  Previous  New

    ≤ 15 yrs  ≤ 78    No annual MIP 11 years

     ≤ 15 yrs  > 78 – 90.00     Cancelled at 78% LTV 11 years

     ≤ 15 yrs  > 90.00  Cancelled at 78% LTV Loan term

     > 15 yrs  ≤ 78   5 years  11 years

    > 15 yrs   > 78 – 90.00  Cancelled at 78% LTV & 5 yrs     11 years

     > 15 yrs > 90.00  Cancelled at 78% LTV & 5 yrs  Loan term


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